The most important economic statistic is not the Dow Jones Industrial Average, the gross domestic product or the federal budget deficit. The most important statistic is productivity growth -- increase in output per worker, in the most commonly discussed variety -- which determines society's standard of living. Five hundred years ago output per worker was minimal, which meant that almost everybody lived way below what we think of as the poverty line. Since then, thanks to technology improvements, output per worker has multiplied hundreds of times, and so, consequently, has what workers earn for a day's labor. These days even some families below the poverty line might have been considered well off in the Middle Ages.

Healthy productivity growth enables output growth, government budget surpluses and rising employee incomes. It's true that robust productivity improvements in recent years have translated more into big corporate profits than into worker gains. Without productivity growth, however, the picture would be even bleaker -- inflation, stagnant output growth and poor tax revenues.

U.S. labor productivity grew at an annual rate of 1.8 percent the fourth quarter, the government announced this morning. That's not bad, but it's not great. For all of 2007 productivity increased by 1.6 percent. This is more evidence that the computer-led productivity boom that began in 1995 or so is petering out, although it's still too early to say so definitively. One result of the last economic slowdown -- from 2001 to 2003 or so -- was a huge increase in productivity -- growth of 3 percent annually or so. Businesses squeezed a lot more product from fewer workers, and they may do so again in this slowdown.

However, there is one big difference between now and then. The early-2000s slump was caused by a decline in business investment, while consumers kept spending. That allowed companies to reap big gains from the investment and hiring they had done in the 1990s. This slowdown looks like it'll be the first consumer recession since 1991. In that case, the outlook for productivity growth isn't nearly as bright.